Banks seen shrinking for good as lay-offs near 160,000

* Thousands more cuts likely as industry restructures

* Investment bankers, equities traders bear brunt of
lay-offs

By Sarah White

LONDON, Nov 16 Major banks have announced some
160,000 job cuts since early last year and with more lay-offs to
come as the industry restructures, many will leave the shrinking
sector for good as redundancies outpace new hires by roughly
two-to-one.

A Reuters analysis of job cuts announced by 29 major banks
showed the lay-offs were much bigger in Europe than in Asia or
the United States. That is a particular blow to Britain where
the finance industry makes up roughly 10 percent of the economy.

The tally of nearly 160,000 job cut plans, meanwhile, is
likely to be a conservative estimate as smaller banks and
brokers are also cutting staff or shutting up shop, and bigger
banks have not always disclosed target numbers of lay-offs.

The tally also does not include reports of 6,000 job cuts to
come at Commerzbank, for example, which the German
group would not confirm last week.

Well-paid investment bankers are bearing the brunt of cost
cuts as deals dry up and trading income falls. That is
particularly the case in some activities such as stock trading,
where low volumes and thin margins are squeezing banks.

"When I let go tons of people in cash equities this year, I
knew most would be finished in this business. It is pretty dead.
Some will just have to find something completely different to
do," said one top executive at an international bank in London,
on condition of anonymity.

The job cuts eat into tax revenues usually reaped from the
sector at a time when the global economic recovery is slowing.

This year's tax income from the industry in Britain could
drop to around 40 billion pounds ($63 billion) this year,
compared to 70 billion in 2007/08, when the financial crisis
hit, the Centre for Economics and Business Research (CEBR)
think-tank said this week.

The job cuts announced since the beginning of 2011 come on
top of job cuts already carried since 2009.

Of the 29 banks, from Europe's biggest bank HSBC to
U.S. investment bank Morgan Stanley, just over 83,700 net
jobs have been lost since 2009, with 167,200 jobs axed and
83,500 created.

Squeezed by regulations forcing banks to store up more
capital in their trading businesses, firms are likely to shrink
their investment banking units even further, as they overhaul
their models to survive.

"It is structural as well as in response to cycles in the
market. The market is still over-broked," said Zaheer Ebrahim at
recruiters Kennedy Group.

Swiss bank UBS last month outlined a further
10,000 lay-offs after announcing a plan for 3,500 job cuts last
year. It said in October it had decided to exit most of its
rates and debt trading units.

Workers in retail banking operation will not be immune to
job cuts either, particularly in slowing European economies. In
France for instance, bank executives predict retail revenues
will falter.

"There are still 300,000 too many full-time employees in the
top financial services players in Europe," said Caio Gilberti
from the financial services practice of consultancy
AlixPartners. Gilberti said cutting those jobs could lop just
over 20 billion euros off banks' collective cost base.

LEAVING FOR GOOD

As banks shrink, fewer of those leaving are able to find
equivalent jobs at rivals, head-hunters and bankers said, and
only a small proportion of those are qualified to move into
other jobs at hedge funds, for instance, which look for
specialised, skilled traders.

Mergers and acquisition dealmakers are now also coming under
pressure, with fees in that area down 21 percent worldwide to
$13.9 billion in the first nine months, Thomson Reuters data
showed.

More senior investment bankers are among those in the line
of fire. Those ranking as managing directors (MDs), who can
command base salaries of around 350,000 pounds ($556,000), are
becoming costly to keep - and difficult to take on.

"At MD level, it is tougher to accept smaller jobs, and they
do not have the same drive and ambition as the young bankers who
have just graduated," Ebrahim from the Kennedy Group said.

Many of those that have enjoyed lucrative careers in the
fatter years are instead leaving big banks for good, setting up
their own small consultancies or different types of businesses.

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